Putins economy This is my attempt to translate the article of V. Noganov about the real economy of Russia, sorry for numerous mistakes, I hope you will understand at least a general sense Pro-government spin-doctors have collected false myths and perfected the methods for online and real life discussions. They pursue only one goal - to justify conceptually, first, that all good things in our country in the past 12 years became possible only thanks to Putin, and secondly, that if for some reason Mr. Putin would lose power, than the national catastrophe immediately begins. It is time to expose the myths and to refute any arguments for continuing the present course, which only managed to squeeze out of their scanty brain incompetent propagandists with their attemps to deceive the gullible voter. Author of article proposes to start from the main myth created by advocates - that the economic growth during the reign of Putin was the result not of high prices for raw materials exported from Russia, but the result is an exceptionally brilliant leadership of the country by the national leader. We prove the opposite - that in reality the economy has got only a tiny fraction of all the proceeds of oil dollars, but even it was enough to ensure the growth of GDP, compared to the 1990s. We show that the Russian economy depends on exports of raw materials, and Putin did not have to do with its growth. This increase occurred even in spite of his actions. Lets start with the macro-economic indicators and demonstrate the real state of the country that are disguised from us. Macroeconomics: happiness in ignorance According to the CB, in 2000 - 2011 years net capital outflow from Russia totaled $ 243.3 billion. Damned 90 hadnt anything similar. Check: i45.tinypic/2ebd6hs.jpg On 01/01/2012 the international reserves (ie, foreign assets, mainly in foreign currency and in dollars and euros, as well as debt securities issued by nonresidents) amounted to $ 505.391 billion. That is hundreds of billions of dollars belonging to Russia, last 12 years are working for the economy of foreign countries: i48.tinypic/2h6stu8.jpg Total external debt of the public and private sectors of the Russian Federation amounted to $ 538.94 billion 01/01/2012. In the damned 90s nobody dreamed about such sums. i47.tinypic/2ibylip.jpg Propagandists tries to justify this debt by increased investment in Russia. Blatant lie. Lets look at the structure of foreign investment: So, under the guise of foreign investment in Russia is mainly returning from offshore tax-sheltered money of Russian origin. i49.tinypic/21al3ba.jpg Cyprus is the leader as you can see. Why? Because there, in particular, reported daughter VTB (Russian Commercial Bank), PSB Alpha Bank, representative of Renaissance Capital, Troika Dialog, Discovery. Most of the Russian assets of Evraz belong to the Cyprus Mastercroft. Rosneft holds a 51 percent stake in Shell Caspian Ventures Ltd. Among the assets of LUKOIL - LukOil Cyprus Ltd, K & S Baltic Offshore (Cyprus) Ltd, LukOil Overseas Cyprus Ltd and Bitech Cyprus Ltd. Cyprus subsidiary company of Norilsk Nickel is Norilsk Nickel Cyprus Ltd. And it is - just the tip of the iceberg. It is unlikely that these companies are coming to Cyprus to get the status of the multinational. Business in the offshore - is actually a way to minimize taxes and to conceal the ownership structure. In addition, it is - an opportunity for profitable companies to play with transfer pricing and credits. And, of course, they come out from the jurisdiction of the judicial system of Russia - one of the most corrupted and controlled in the world. Propagandists argues that all these numbers - mostly private debt, not public. What is our private sector? This - the legal entity in legal organizational forms of OJSC, UAB, LLC. And even that is considered private debt of private companies, the shares of which are 100% state-owned. Net debt of Rosneft in the II quarter of 2011 totaled $ 12.45 billion. Its major shareholder (75.16% of shares) is Rosneftegaz, is 100% owned by the state. However, this debt is private, formally. But in fact it is - the state. Net debt to Gazprom as of March 11, 2011 totaled more than $ 27.8 billion. This is private debt too. But who in their right mind would risk to say that Gazprom is a privately owned shop by Putin and Co? Third of all corporate external debt accounts for state-owned companies and banks. According to the Deutsche Bank in 2010 on the three largest state-owned companies (Gazprom, Rosneft and VTB) accounted for 20% of total external debt. This is not counting the smaller companies. Thus, the external debt of the private sector of the Russian Federation to a large extent belongs to the state. So, Russias foreign debt can and should be considered only in the aggregate - and the private and the public. No one remembers Putins promises of doubling the GDP. We know the worth of his promises. Nevertheless, we verify whether the GDP has doubled even not since 2003, but since 2000. Of course, in 2003 prices. i47.tinypic/1r45k8.jpg Doesnt seem like that. GDP growth in 12 years was approximately 65%. But in many other former Soviet republics without any promises, they have doubled the GDP: i49.tinypic/a88jp.jpg Even Tajikistan have been able to do it. This is time to propose the slogan: Catch up and surpass Tajikistans GDP growth! Bleak picture. Those would be fun to see how much our economy depends on oil prices. Oil in exchange for fun During the 2000-2011 years. Russia exported: crude oil - 2.684 billion tonnes at $ 1.047 trillion; oil - 1.171 billion tonnes at $ 484 billion, natural gas - 2.257 trillion cubic meters at $ 427.158 billion Total: 12 years from Russia was only pumped oil and gas the amount of $ 1.958 trillion. Heres how it looks: i49.tinypic/10hrsc3.jpg i46.tinypic/2yvs3uo.jpg i46.tinypic/31270g0.jpg Just look at the commodity structure of export and import to understand that Putin has sent down Russia to the level of raw materials appendage of the West, with risking to proudly call this the energy superpower. i45.tinypic/1zg5c3d.jpg i47.tinypic/2gtb6t3.jpg As you can see, all the raw materials pumped at a frantic pace, and any complex products are imported from abroad. Particularly impressive is the share of machinery and equipment - half of all imports. The power stroke on the machine-building complex can not be overstated. The federal budget depends almost exclusively on oil revenues. You can verify this by looking at their relationship with other federal budget revenues (according to the Federal Treasury and the Ministry of Finance): i49.tinypic/u0ktx.jpg It is possible to show even more clearly. Heres the place occupied by oil and gas revenues in the structure of federal budget revenues in 1999, when Putin just come to power, in comparison with 2011 year: i46.tinypic/mm8jgi.jpg But even though a foreign market conditions, from 2009 government is no longer able to make ends meet in the budget: If seven years ago, Russias budget was balanced with the price of oil is $ 27 per barrel, before the crisis - $ 90 per barrel, then [2011] to balance the budget, oil should cost $ 115 per barrel, - said former Minister of Finance Alexei Kudrin. i48.tinypic/2ylkaxh.jpg And now, looking at the balance of revenues and expenditures in the budget, try to guess what would happen if from the blue column to remove 56% of the oil and gas revenues? For example, the deficit of the Pension Fund of Russia in 2012 amounted to 1.75 trillion rubles. ($ 58 billion). This is - an enormous hole, which can only score petrodollars. What happens, for example, with pensions, when after the second wave of the global economic crisis, oil prices will fall to $ 30 per barrel? You say this is impossible? And President Medvedev has already admitted that Russia does not expect less significant tests than in 2008-2009. Then it looked like this: After a couple of years it could be even worse. Meanwhile, Russia in 2010 came to the first place in the world oil production. On average, in the I quarter of 2011 a day in Russia was mined 10.2 million barrels. The volume of oil refining in the first half of 2011 reached another high record - 149.6 million tons. In this quantitative growth occurs at the expense of quality reducing: the proportion of oil in total oil production has reached a multi-year high, and the depth of refining of crude oil - a multi-year low. In addition, unlike Russia, Saudi Arabia can afford to be the worlds first oil production - with their then-stocks. Just look at the size of countries according to their oil reserves: greenword.ru/images/whohasoilmap.jpg However, under Putins control Russia is the world leader in the pumping of oil from its own entrails. And the professional patriots are even proud of this fact. In 2003 adopted the Energy Strategy of Russia until 2020. Its leitmotif - the maximum extraction of oil and gas from the bowels for the purpose of selling in foreign markets. In the first half of 2011 already 48% of the oil was exported (as well as in the Soviet Union exported only 22% of annual production). More than one third of oil products and gas production is also exported abroad. The entire increase in oil production over the past 10 years has left for export. During the period of 1990-2009 years domestic oil consumption is practically not increased, even though production has increased from 323.3 million tons in 2000 to more than 500 million tons in 2010. As for gas, Russia is also ranked first in the world for its production and export. It would seem that under the current strongly dependent on oil and gas exports would be wise to take care of the timely replenishment of stocks. However, virtually all oil and gas fields, which provide the current level of production, were discovered in Soviet times. Over the entire 20-year existence of the state RF in industrial development only one large oil field (Vankor) was introduced. After the collapse of the USSR Ministry of Geology was abolished, the number of employees of the Geological Survey in the country decreased by 10 times, the amount of exploratory drilling declined in 4-5 times, significantly decreased amounts of geophysical surveys. In fact, the whole program for exploring of mineral resources was phased. Putin not only did nothing to change the situation, but also worsened it, by repealing the tax on the recovery of mineral resources (VMSB) in 2002. Before the oil companies funded 90% of explorations at the expense of the VMSB and only 10% - at their own expense. Canceling of VMSB led to the precipitous decline in the already collapsing of exploration that can be clearly seen in the chart: i46.tinypic/2evxlz8.jpg The sharp decline of drilling operations has reduced the demand for geological exploration and drilling equipment, left without work a lot of design institutes, service companies simply ceased to exist. By the way, in 2011, Putin approved a new tax regime, 60-66 for the oil industry, providing for reduction of export duties on crude oil to 60%, and the equalization of duties on light and heavy oil (up to 66% of the duty on crude oil). This made it even more profitable export of crude oil and a powerful blow to the oil refining industry, which could lead to a reduction in one-third of volume of oil refining in the country in 2012, as well as to the repetition of the petrol crisis. Total dependence on energy exports predetermined operation on the depletion of oil fields in Western Siberia. Their reserves are coming to their end, productivity is well declining. Because of the forced selection reservoirs energy is lost rapidly, oil recovery factor is falling. In Western Siberia it has about 20-25%, whereas in Soviet times - 40-45%. Often application of the flooding method of mining has led to premature flooding of many of the producing wells. The average water cut production wells in Russia is 82%, and some of the same fields in Western Siberia - 90%! Due to the water content when the well pumps water and little oil, we have thrown more than 700 thousand wells, developed only on the third! In addition, there is a problem associated gas which is burned in flares, and inflicting great damage to the environment. In Russia, 27% of the produced associated gas is flared: runature.ru/sites/default/files/source_images/story/2011/06/27/415/grafika_poputnii_neftyanoi_gaz.jpg This is a nigerian savagery. As for gas, the region of traditional natural gas production - the same fields in Western Siberia with mines Medvezhie, Zapolyarnoye, Urengoy, and others which are also in the stage of declining production. Medvezhie Mine has been extracted 75% of resource, Urengoy - 65%, Yamburg - 54%, etc. Nevertheless, they continue to be exploited up to the depletion, and yet they account for almost 90% of the annual gas production. However, unlike oil, for the gas we have more prospects: But it is only at first glance. The main hopes for the Shtokman field. It is located between Novaya Zemlya and Spitsbergen, on the border of the ice, at depths greater than 300 m main difficulty in the development is the inability to reach the goal with the help of modern Russian technologies, as at this depth it is impossible to use conventional offshore platforms. Moreover, in the area were recorded of the tectonic shifts, and the condensate is at a depth of 1.5 km from the bottom. But even if there is gas production can begin, it will need to deliver to the mainland via a pipeline. And this is more than 500 km. Heres how it is currently Gazprom: Price of the project is unlikely to be less than $ 30 billion This certainly a lot cheaper than starting to pump gas directly from the atmosphere of Jupiter, but technically is not much easier. Thus, the oil and gas production in Russia is not compensated by replenishing their stocks. As a result, the whole of Russia hydrocarbon reserves have decreased by 15%, and in Western Siberia - 20%. If the situation does not change, the 2030-th year, we will see the collapse of the oil industry. For gas, this event could happen in 2040-s. Revenues from oil exports are not distributed per capita, and distributed among the defendants in the list of Forbes, international reserves and the federal budget. By the way, here are the combined wealth of billionaires in Russia (and all sorts of cheaper multimillionaires from the second list of hundreds of Forbes on the chart does not even reflect): i45.tinypic/ax1szp.jpg By the way,those happy 200 guys from the Russian version of Forbes has always taken into account when calculating the statistics of average earnings growth of the population. Keep this in mind when someone will explain you something about the growth of income per capita. They have - revenues, perhaps, not less than all the other citizens of the Russian Federation together. We make a rough calculation: Revenue from oil and gas exports (not counting the other minerals) since 2000 was $ 1.958 trillion. State of defendants in the list of 200 Russian Forbes - $ 499 billion. International reserves of the Russian Federation on 01.02.2012 - $ 512 billion. $ 212 billion - was spent in excess of this amount of international reserves to rescue the oligarchs during the first wave of the crisis in 2008-2009. We get the balance of $ 456 billion. Who knows how much of them have been spent on any palaces and villas, drowned in the black hand of the Kremlin, was stolen in the public procurement etc? So, at best, one tenth of the $ 2 trillion in oil and gas revenues actually contributed to the 65-percent increase in GDP. And imagine what would happen if all the $ 2 trillion was actually invested in the development of the country, not ineptly been spent on the yacht Bentley and Maybach, Ferrari and Maserati for racing of golden youth in Switzerland, on villas and football clubs, just not settled on a offshore accounts of corrupted officials and multiplying like by leaps and bounds oligarchs? But this - Putins course, and he, as we know, can not be wrong.
Posted on: Thu, 31 Oct 2013 19:09:20 +0000
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